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For weeks now, we’ve been in the holiday spirit around here. With one of staff members affected by Hurricane Isaac and other staff members coming back from vacation, most of us are ready for a bit of holiday cheer, crisp weather and, of course, the new and improved layaway plans that are red-hot this season.

Consumers are looking for ways to better prepare for the holidays, the gift giving, the meals and the travel. While most of us are incorporating our credit cards and taking advantage of our Christmas or other holiday savings accounts, there is a growing number of Americans who are returning to the tried and true layaway programs – and trust us, retailers are loving it.

Take a look at some of the big announcements by retailers we all know and love – or not:

Wal Mart

Wal-Mart has big plans for its holiday layaway program; specifically, it’s getting started a month earlier in addition to increasing the service fee. Last year, we could use the layaway program for just $5. This year? Look for that to triple to $15. But – before you write Wal Mart off, keep in mind a few things. First, if you’re the kind who likes to get in and get it done, you can start your layaway a month earlier. A layaway works by a retailer allowing its customers to basically use its warehouse as storage. It will hold those items in its warehouse for weeks while also allowing those customers to pay a small amount each week. It’s a massive convenience and too, if you think about it this way, it makes more sense.

Odds are, we’ll be using our credit cards at some point for our layaway, but remember – you’re not paying interest on that $15 service fee and you’re not paying interest on your total bill unless you use your credit card, of course. And you’re keeping it all in a safe storage area where that your excited little ones aren’t even aware it exists. And if that’s not enough – here’s your “cherry on top of the sundae” moment: consumers can get that $15 back in the form of a store gift card – a new, more consumer-friendly perk that eliminates the cost without cutting the convenience.

Flip Side

Alright – now, the flip side – and you’ll need to check with the retailer you choose so that you aren’t caught unaware. Many retailers will cancel the layaway if you miss a single payment. And you often can’t recoup your service fee (though you do get a refund of what you’ve paid on the actual items). Retailers aren’t hesitant to return items to stock either, especially if you caught it while it was on sale. You miss a payment, you lose the fee and the retailer can resell it for its normal price, not the price you would have ultimately paid plus the 20% savings (if you caught it on sale, of course). So if you go into a layaway, be sure to follow through with it.

There’s also the flip side of putting something on layaway while it’s NOT on sale: you could find it a few weeks later for a lower price than what you’re paying. Of course, you can pull it from your layaway (if it’s not the only thing in your package) and put the sale item into layaway usually – but you’re going to pay another fee. It might not be worth it.

Do the Math

Do the math too. You have to ask yourself and maybe even crunch the numbers to see if layaway is going to be a better deal than holding out for a sale price and then putting it on your credit card. Consider this:

Using a $450 game console as an example, you sign up for a retailer’s layaway and you opt for an 8 week layaway contract. Let’s assume you’re going to pay a $5 fee. You put a $91 down payment plus the $5 fee. Every week, you pay around $45 for the next two months (eight weeks). That totals $454, give or take a few cents. That equates to about 14% and it’s paid in full with no temptation to make the minimum payment on your credit card for an extended amount of time, thereby increasing the interest you’ll ultimately pay. Clearly, it’s a better financial option.

Remember that layaways are not reported to the credit bureaus, so if you’re looking to rebuild your credit, you might want to consider a more traditional route, even a secured credit card, for your purchase.

Finally, as we were researching this column, we stumbled upon a new policy by Toys R Us – and it’s a great one. Here’s what’s going on:

Beginning September 4th, Toys R Us is making it easier for shoppers to use its layaway program. It’s waiving its service fees and its minimum purchase requirement for layaways. Yes – that means you can use the layaway program for free. Some folks are saying Wal Mart raised its service fee because of the huge demand last year, and now, Toys R Us is eliminating its service fee for the same reason.

Retailers, with the exception of Wal Mart, will be pulling out all the stops for customers as the intensely competitive holiday season approaches, which can account for as much as 40 percent of annual sales. Not only that, but the Toys R Us new program will last a month longer than last year’s and will include more items than the toys and electronics featured last year. It applies to all layaway orders created in store from Sept. 4 through Oct. 31. After Oct 31, a $5 service fee will apply. Also, there will be no minimum purchase price. Customers have until Dec. 16 to pick up their orders.

We continue to look for ways to help our customers stretch their budgets, and by taking advantage of this free layaway option, they can make a series of small payments over time, as they begin to think about what might be on their children’s holiday wish lists,

said Troy Rice, executive vice president for stores and services at Toys R Us U.S.

So there it is. Will layaway be part of your buying strategy this holiday season? Let us know – we want to hear what you have planned to cover the expenses.

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